Clive Palmer says he will launch defamation proceedings against Campbell Newman "as soon as possible", claiming the premier has made claims which are "damaging to his integrity".
Mr Palmer made his announcement on Sunday night, following claims from Mr Newman earlier in the day that Mr Palmer had "tried to buy [the Queensland LNP] government" and was "on a rampage around Australia trying to buy other people and buy other people's votes".
Mr Palmer denied offering the "Newman government or any member of parliament any money or inducements".
"At no time have I sought favours from the Newman government for anything," Mr Palmer said in his statement.
"Campbell Newman's comments are defamatory and made for political purposes only.
"... I will commence legal proceedings as soon as possible on these defamation matters, and there'll be no out of court settlements in these proceedings."
The Member for Fairfax will hold a press conference on the matter on Monday afternoon.
Mr Newman had made the claims during a press conference with Tony Abbott when the Prime Minister was asked about the defection of three Northern Territory Country Liberal Party MPs to the Palmer United Party.
Mr Palmer had accused NT Chief Minister Adam Giles of being " a liar".
Mr Newman responded "that is what he says about everybody".
He went on to say "this is a guy who tried to buy a government, my government, we said 'go away, we're not for sale'. As a result he has gone on a rampage around Australia trying to buy other people and buy people's votes and we are seeing that in the Northern Territory today".
"What offers were made to get them to jump ship? I reckon if he's consistent with the way he operates around the nation, he's busy trying to buy votes and buy people. That's what he does."
Mr Palmer said the three former Northern Territory CLP MPs had sought out meetings with his party and joined with no inducements.
Mr Palmer, once the Queensland LNP's biggest supporter, fell out with the government in late 2012, quitting the party ahead of an expulsion vote by the party executive.
Mr Newman stayed silent on the reasons for the fallout until Mr Palmer announced his political intentions.
Breaking his self-imposed policy of not commenting on Mr Palmer, Mr Newman said the former LNP life-member had demanded special treatment from the government and had sought to influence its decisions.
Mr Palmer, who had previously claimed Mr Newman had bipolar disorder, accused the government of corruption.
The feud has continued to play out in the media, with each continuing to make claims against the other. Mr Newman has questioned Mr Palmer's commitment to his Sunshine Coast resort, accusing him of turning it into a "sad, sick joke" and his Townsville nickel refinery, which has been the subject of environmental concerns in regards to its tailings dams.
Mr Palmer has previously accused Mr Newman of being a "dictator" and has questioned the links between lobbyists and the government.